Australia has joined Japan as one of the most dynamic markets for pension growth in the world, according to a State Street report.
Australia and Japan will continue to be the biggest markets.
Australia and Japan’s retirement savings bases are $770 billion and $2.5 trillion respectively, State Street report The Pensions Industry – Bridging the Gap found.
“Australia has an enviable defined contribution system in place since 1999 and is likely to reach $1.1 trillion by 2011,” the study said.
“A solid base of mandatory employer contributions of 9 per cent guarantees growth. Competition among providers – not-for-profit and commercial – ensures the system is attractive to ordinary workers.”
Global occupational and personal pension savings doubled to about $24 trillion over the 10 years leading up to 2006 and are expected to exceed $34 trillion by 2011, the report found.
Chile, Germany and Taiwan have rolled out successful pension reforms in the last 10 years.
The United Kingdom and China will introduce new programs in coming years.
One challenge for the Chinese pension system is its “graying” population, State Street found.
By 2040 it is expected to be paying pensions to 397 million people.
The study voiced concerns over inadequate retirement savings coverage.
In the world’s two largest occupational pension markets – the US and UK – around half of the workforce does not take part in a retirement plan, it said.
